I am writing today to announce the closure of the New Mexico Independent. After three and a half years of operation in New Mexico, the board of the American Independent News Network, has decided to shift publication of its news…
While environmental activists played their part yesterday during demonstrations at the capitol building, going so far as to dress up as solar panels and to sing the tune of “You Are My Sunshine,” their counterparts, the anti-cap-and-trade contingency who has…
Roughly one quarter of University of New Mexico students are unimpressed with the state’s flagship public school, according to a survey that questioned college students about their higher education experiences.
The U.S. Census Bureau released its findings on income, poverty and health insurance coverage for 2010, finding that median household income declined by 2.3 percent to $49,445, poverty rose to 15.1 percent from 14.3 percent and the number of…
After learning that four of the state’s major health insurers plan to limit the number of insurance policies they write for children with preexisting conditions, New Mexico decided to open its public high-risk insurance pool to kids. Lovelace, Presbyterian, United and Blue Cross and Blue Shield all notified the state that they intend to limit how often they will take applications for health coverage for children with preexisting conditions to once or twice a year in open enrollment periods.
New Mexico is getting a federal grant to help beef up consumer protection efforts. The money will be used to help consumers file complaints and to appeal insurance company decisions, track and analyze trends in those complaints, and to fund a full-time staff position to assist consumers who are seeking health insurance coverage,
State Insurance Superintendent John Franchini has said he plans to meet individually with members of the Public Regulation Commission to discuss how the division plans to fix serious problems pointed out in a recent national audit. “They may think they’ve figured out a ‘loophole’ [in the Open Meetings Act], but they’ll lose the public’s trust and confidence in the process. So what have you really gained?” says Sarah Welsh of the Foundation for Open Government.
Sen. Jay Rockefeller, the powerful chairman of Senate Committee on Commerce, Science and Transportation, wants more details of the company’s intentions to drop a health care plan that could leave 30,000 employees uninsured, The Wall Street Journal reports.
McDonald’s
Starting today health insurers can’t deny coverage to New Mexico children under the age of 19 with preexisting conditions. And adult children can stay on their parents’ insurance policies until age 26. Those changes are two of several provisions of the…
Despite having one of the worst childhood poverty rates in the U.S., only 81.1 percent of New Mexico children who qualify for the Medicaid State Children’s Health Insurance Program (SCHIP) were enrolled in the program in 2009, according to a new report by the Henry J. Kaiser Family Foundation.
That’s below the national average of 81.9 percent enrollment—but most of New Mexico’s neighboring states have lower rates. Colorado, Utah, Arizona and Texas had all enrolled fewer than 79.2 percent of eligible children in SCHIP, according to the 2009 data. Oklahoma enrolled 81.4 percent of eligible children, roughly matching New Mexico’s enrollment.
SCHIP was established by Congress in 1997 to provide health insurance to children in families at or below 200 percent of the federal poverty line. More …
More than three-quarters of children in New Mexico (78.6 percent) live below 200 percent of the poverty level, and the state has the 7th highest percentage of uninsured children, according to a new report (Uninsured Children: Who Are They and Where Do They Live?) from the Robert Wood Johnson Foundation. That’s despite a 20-year trend in increasing rates of health care coverage for kids. More …
A contentious all-day hearing Wednesday left many Blue Cross and Blue Shield of New Mexico customers saying they see little hope for relief from a controversial 21.3 percent increase in their health insurance premiums. Even though the company’s cash reserves have now reached $7.2 billion, an expert witness for the Attorney General’s office’s, who reiterated earlier testimony that Blue Cross had not sufficiently documented its claimed cost figures, and whose analysis found the insurer’s rate filing had exaggerated company losses, said the 21 percent increase was “reasonable, given the circumstances.”
Controversy has surrounded the state’s approval of a 21.3 percent rate hike on 40,000 Blue Cross and Blue Shield of New Mexico health insurance policyholders, but the state Division of Insurance approved Presbyterian Insurance Company’s even larger, 24 percent health…
Regulators in California moved Wednesday to allow Anthem Blue Cross Blue Shield to raise its rates by as much as 20 percent, the L.A. Times reports. The company had originally asked for premium increases nearly twice that high, but…
The Public Regulation Commission (PRC)’s Division of Insurance will hold a public hearing Wednesday in Santa Fe on Blue Cross and Blue Shield of New Mexico‘s controversial health insurance rate hike.
Blue Cross will be asked…
Since December 2008 A.V. Ley has experienced two double-digit increases to the monthly health care premiums he pays Blue Cross Blue Shield of New Mexico, he says. So when the retired engineer learned Monday that New Mexico had won a $1 million federal grant to strengthen how New Mexico vets health insurers’ rate-hike requests, he cheered. New Mexico was one of 45 states to win $1 million Monday to help beef up how it reviews rate-hike requests by health insurers. U.S. Health and Human Services (HHS) Secretary Kathleen Sebelius on a conference call with reporters Monday characterized the money as a way to “restore some basic fairness” for consumers who find themselves battling a perennial rise in the cost of health care.
Thursday on the KUNM evening news, The Independent’s Bryant Furlow discussed the efforts of Blue Cross and Blue Shield of New Mexico to raise rates on individual policy holders in the state. The state Supreme Court ruled this week…
The Public Regulation Commission (PRC) voted 4-to-1 Tuesday afternoon to appoint John G. Franchini as the state’s newest superintendent of insurance. Commissioner Jason Marks cast the dissenting vote.
Franchini has worked in the insurance industry for more than 35 years, since he joined his father’s insurance brokerage as a salesman, according to a letter to commissioners that accompanied his resume. He worked as vice president for government affairs at New Mexico Mutual, the state’s workers’ compensation underwriter, from 2002 until January 2010, according to his resume.
Franchini was appointed one day before the state Supreme Court is scheduled to hear a Blue Cross Blue Shield NM petition to reverse acting superintendent Johnny Montoya‘s order suspending the rate hike. More …
The president of California’s Anthem Blue Cross resigned Tuesday after months of controversy over her efforts to impose a 39 percent health insurance rate increase for 800,000 policyholders.
Leslie Margolin, 55, ran Athem for just 2 1/2 years. She has faced intense criticism from California lawmakers and the Obama administration, including U.S. Health and Human Services Secretary Kathleen Sebelius, who questioned the rate increase and described it as excessive. More …
Theresa Becenti-Aguilar‘s top priority on the Public Regulation Commission (PRC) will be empowering PRC employees, she told staffers this week — but protecting consumers will be a close second, she said.
The Insurance Division’s negotiation of a controversial…
Blue Cross Blue Shield has asked the state Supreme Court to block the PRC’s decision to suspend a controversial 21 percent health insurance rate hike. The company says it complied with all regulations in pursuing the rate hike and negotiated with the Attorney General’s office and Insurance Division in good faith to arrive at the settlement. That settlement came after the state’s expert concluded the rate hike was unjustified and the company had “inflated” its losses.
The Blue Cross Blue Shield New Mexico health insurance policyholder who signed off on last month’s controversial rate hike settlement, has asked the state Insurance Division to reverse its approval of that deal.
Jody Neal-Post submitted a…
Blue Cross Blue Shield of New Mexico did not provide the state Insurance Division with documentation for financial losses and expense figures cited as justification for last month’s controversial health insurance rate hike, Public Regulatory Commission (PRC) records show.
The company’s defense for failing to back up their figures with supporting evidence? Regulators did not ask for any.
Insurance Division staff have not required Blue Cross Blue Shield NM, or other health insurers, to submit documentation supporting rate increase requests, Blue Cross Blue Shield officials said, leading PRC Commissioner Jason Marks to describe the Division’s regulatory culture as “insufficiently skeptical.”
Rate hike application ‘not properly documented’
When the Attorney General’s office hired award-winning insurance rate analyst and former New Jersey insurance regulator Allan I. Schwartz as an independent expert to review Blue Cross Blue Shield’s rate hike filing, he reported that supporting documentation for most of the figures cited by the company was missing. And what little data was available, Schwartz concluded, contradicted the company’s claims.
The company’s requested rate hike was not justified, he concluded.
“The BCBSNM rate filing was not properly documented and supported,” Schwartz said in testimony to the Insurance Division March 2. “The filing did not provide sufficient documentation regarding numerous aspects of the BCBSNM rate calculation … Hence, the filing does not provide reasonable actuarial support for the proposed rate changes.”
Approving the rate hike would “continue a pattern of large rate increases for New Mexico health insurance consumers,” Schwartz cautioned, making it “increasingly difficult” for New Mexicans to afford individual health insurance.
The company presented numerous complex economic expense and loss indicators — variables such as “duration adjustments,” “deterioration adjustments,” and “annual deductible leverage.”
These figures were used to calculate an “Indicated Rate Change.”
Data presented contradicted BCBS claims
But the figures may have been smoke and mirrors, Schwartz suggested.
“The problem with the BCBSNM filing is that none of these various components … were documented or supported,” he said.
Where data was available, it contradicted Blue Cross Blue Shield’s claims, Schwartz found.
The “annual base trend” is an estimate of past financial losses. It is used to adjust projected future revenues from individual insurance policy premiums.
Schwartz calculated the company’s actual yearly loss trends on individual-market insurance policies over the past seven years and found they had varied between 4 and 8 percent — well below the 10 percent a year claimed by Blue Cross Blue Shield.
“Based upon this analysis, the loss values used in the BCBSNM rate filing are inflated and result in an excessive rate indication,” Schwartz said.
The Insurance Division and Attorney General’s office staff nevertheless negotiated a weekend rate settlement deal to raise Blue Cross Blue Shield rates by 21.3 percent for approximately 40,000 New Mexicans, without a public hearing that had been ordered by PRC commissioners. Former state insurance superintendent Morris “Mo” Chavez resigned in the face of outrage over the deal expressed by policyholders and PRC commissioners. Interim superintendent Tom Rushton, who helped negotiate the deal, subsequently resigned after PRC commissioners voted to direct him to vacate Chavez’s approval of the rate hike.
Parent company had surplus of $6.7 billion
Last month’s rate hike was just the latest of many, The Independent found. The Insurance Division had approved Blue Cross Blue Shield rate hikes every year since 2004, PRC documents show.
Blue Cross Blue Shield NM officials and former state insurance superintendent Morris “Mo” Chavez repeatedly raised the specter of the insurer’s solvency and financial losses. But asked about the financial condition of the insurer’s parent company, Health Care Service Corporation, Schwartz painted a very different picture, testifying the firm “has a strong financial position.”
“At year-end 2009, Health Care Services Corporation had a surplus of about $6.7 billion,” Schwartz testified, citing the corporation’s annual report.
In each year since 2004, the Insurance Division approved Blue Cross Blue Shield NM rate hikes. But for each year since 2005, Schwartz found, Health Care Service Corporation had a net income of at least $500 million, for a total net income of $4.4 billion.
Health Care Services Corporation’s net income last year exceeded $740 million, according to a May 25 online company profile.
Health Care Services Corporation’s annual report also showed “a much lower level of expenses” than Blue Cross Blue Shield NM claimed to the Insurance Division, Schwartz noted.
Blue Cross Blue Shield told state regulators that 26 percent of insurance premium revenues go to corporate expenses, but the parent company’s annual statement shows an 11 percent expense ratio, Schwartz said.
“While there may be an explanation for the dramatic difference in the expense ratios shown for Health Care Services Corporation as a whole and the values BCBSNM included in its filing, BCBSNM has not provided such an explanation,” Schwartz said.
Nor did the company include in their projected future losses, the savings resulting from disease prevention and wellness programs, Schwartz noted — even though those programs had explicitly been adopted to reduce policyholders’ medical claims costs.
Regulators did not request supporting documentation
Blue Cross Blue Shield did not provide supporting documentation for its claims because they were never asked to do so, according to company officials.
The Blue Cross Blue Shield rate increase filings included “everything required by the New Mexico Insurance Division,” Director of Actuarial and Underwriting Department Kevin Carr testified April 9, citing a Division checklist for rate increase filings. “We are not required by the NMID (Insurance Division) to include all of this documentation in our rate filing.”
“Based on my discussions and correspondence with the (Insurance Division) staff, they felt that our assumptions, including trend, were reasonable,” Carr testified.
Rate increase filings in New Mexico “generally do not include all of the underlying data”, Carr said. “In fact, based on my review of rate filings of other insurers in New Mexico, we generally provide much more information in our filings than most of the other insurers.”
Insurance Division staffers take insurers’ figures at face value, Carr’s testimony suggested.
For example, the 10 percent “annual base trend” figure Schwartz found to be inflated had been accepted by Insurance Division staffers even without the underlying data, Carr claimed.
“The 10 percent assumption for the annual base trend was specifically reviewed by and discussed with (Insurance Division) staff as part of the rate increase process, and they agreed that it was a reasonable assumption,” Carr said.
Insurance Division staff did not question the other figures, Carr said.
“The (regulatory) culture is insufficiently skeptical,” PRC Commissioner Jason Marks said. “On health care, the assumption is costs are just a national disaster and nothing can be done about it … that it’s unavoidable. But rates are rising faster than needed. There needs to be more skepticism, and related to that I’d like to see a different orientation. The regulator has a responsibility to make sure every penny passed on (to consumers) is required by law.”
Marks had described last month’s weekend rate hike settlement as “a back room deal,” a reference to the Insurance Division’s failure to hold public hearings.
The Division has a responsibility to confirm insurers have prudently incurred the expenses cited in rate change filings, Marks said.
“Just because there’s a cost in your accounting system doesn’t mean you accrued it responsibly and can pass it on to consumers,” Marks said.
